Correlation Between Chimera Investment and Blackstone Mortgage

Can any of the company-specific risk be diversified away by investing in both Chimera Investment and Blackstone Mortgage at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Chimera Investment and Blackstone Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chimera Investment and Blackstone Mortgage Trust, you can compare the effects of market volatilities on Chimera Investment and Blackstone Mortgage and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Chimera Investment with a short position of Blackstone Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chimera Investment and Blackstone Mortgage.

Diversification Opportunities for Chimera Investment and Blackstone Mortgage

-0.44

Correlation Coefficient

Chimera Investment  Blackstone Mortgage

Very good diversification

The 3 months correlation between Chimera and Blackstone is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Chimera Investment and Blackstone Mortgage Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Mortgage Trust and Chimera Investment is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Chimera Investment are associated (or correlated) with Blackstone Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackstone Mortgage Trust has no effect on the direction of Chimera Investment i.e., Chimera Investment and Blackstone Mortgage go up and down completely randomly.

Pair Corralation between Chimera Investment and Blackstone Mortgage

Considering the 90-day investment horizon Chimera Investment is expected to under-perform the Blackstone Mortgage. In addition to that, Chimera Investment is 1.14 times more volatile than Blackstone Mortgage Trust. It trades about -0.03 of its total potential returns per unit of risk. Blackstone Mortgage Trust is currently generating about 0.16 per unit of volatility. If you would invest  1,724  in Blackstone Mortgage Trust on December 30, 2024 and sell it today you would earn a total of  262.00  from holding Blackstone Mortgage Trust or generate 15.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Chimera Investment  vs.  Blackstone Mortgage Trust

Chimera Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chimera Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Chimera Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Blackstone Mortgage Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackstone Mortgage Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, Blackstone Mortgage unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chimera Investment and Blackstone Mortgage

The main advantage of trading using opposite Chimera Investment and Blackstone Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chimera Investment position performs unexpectedly, Blackstone Mortgage can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Blackstone Mortgage will offset losses from the drop in Blackstone Mortgage's long position.

The idea behind Chimera Investment and Blackstone Mortgage Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.